iPhone simulator on Android. It will pretty much look like wine on Linux.
Android simulator on iPhone, not very likely, or at least not very likely be sanctioned by Apple.
Mobile phones are just a way to get connected on the go, not a replacement for desktop/laptop computers.
There will be a sub-industry for customizing current websites to adapt mobile browsers. Although the current state-of-the-art mobile devices (aka iPhone) are able to browse normal websites, there are important differences. The screen size is now, and will be in the long term, a limitation (or difference) in the mobile devices.
Everybody in the mobile industry is talking about LBS. But it will take longer than expected for the general public to accept it.
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